One Stop Shop – Changes for Online Sellers

Table of Contents

  1. Introduction
  2. Understanding the One Stop Shop (OSS) Regulation
  3. OSS Exclusions and Special Cases
  4. Impact on Non-EU Online Sellers
  5. Filing OSS Returns
  6. Frequently Asked Questions (FAQ)

Introduction

With the rapid expansion of e-commerce, navigating VAT regulations has become increasingly challenging for online sellers. The European Union introduced the One Stop Shop (OSS) regulation in July 2021 to streamline VAT reporting and reduce the burdens on businesses. This blog post explores the major changes brought about by the OSS, detailing the registration process, outlining its benefits, and explaining how it impacts both EU and non-EU sellers.

If you're an online seller grappling with the complexities of VAT compliance, or simply interested in understanding the new regulations, read on to learn how the OSS can affect your business and the steps you need to take to stay compliant.

Understanding the One Stop Shop (OSS) Regulation

From Mini One Stop Shop (MOSS) to OSS

Before July 2021, the Mini One Stop Shop (MOSS) system was used for electronic services like telecommunications, broadcasting, and electronic (TBE) services within the EU. The OSS extends this system to cover all business-to-consumer (B2C) services, distance sales of goods within the EU, and certain domestic supplies facilitated by electronic interfaces. Additionally, a new scheme, the Import One Stop Shop (IOSS), was created for low-value goods imported from outside the EU.

Key Benefits of OSS

The OSS simplifies the VAT return process by consolidating it into a single submission for all relevant sales across the EU. This system is designed to reduce administrative burdens and streamline processes:

  • Simpler VAT Returns: Instead of multiple returns for different countries, businesses submit one consolidated VAT return through their home country.
  • Centralized Payment: All VAT payments are made in one country, simplifying financial operations.
  • Unified Registration: Businesses register once for OSS, covering multiple EU countries.

How to Register for OSS

Registration is an essential step for businesses wishing to utilize the OSS. Initially, businesses needed to register by June 30, 2021, to use the OSS from July 1. Ongoing registration is straightforward via the Federal Central Tax Office's (BZSt) online portal. Key steps include:

  1. Access the BZSt Portal: Log in using a certificate file to access the portal.
  2. Complete Registration Form: Fill out the "Registration notice for participation in the OSS EU regulation" form.
  3. Submit the Form: After submission, the BZSt provides written confirmation of your registration.

Proactive registration is recommended to avoid delays, particularly for those without an existing user account. Consulting a tax advisor can assist in navigating any uncertainties during this process.

OSS Exclusions and Special Cases

Transactions Not Covered by OSS

Certain transactions require separate reporting and are not included in the OSS scheme:

  • Domestic Sales: These must still be reported through standard VAT returns in each applicable country.
  • Imports, Purchases, and B2B Sales: These transactions are excluded from OSS and need to be handled via standard VAT returns.

Implications for EU-Based Online Sellers

A significant change brought by the OSS is the abolition of the old distance sales thresholds. Now, EU companies storing goods only in their home country benefit from a single EU-wide €10,000 distance sales threshold, eliminating the need for multiple VAT registrations. However, companies storing goods in multiple countries must still obtain VAT numbers for each location.

Scenarios for OSS Reporting

To illustrate the impact of OSS registration, consider the following examples:

  • Alpha Services (Single Storage Country): This German company only stores goods in Germany but sells to France, Italy, and Spain. Under OSS, they need a single VAT number in Germany and report all cross-border sales through one OSS return.

  • Beta Products (Multiple Storage Countries): This company stores goods in Germany, France, Italy, and Spain. Therefore, they must maintain VAT registrations in all these countries and report through both OSS and local VAT returns.

Impact on Non-EU Online Sellers

Distance sales thresholds for individual countries no longer apply to non-EU sellers. Key distinctions for these businesses based on warehouse presence and sales methods include:

Without a Deemed Supplier

Direct sales from outside the EU are still considered exports. The end customers are responsible for customs duties and taxes.

  • Example: Gamma Ltd, a non-EU company storing goods only in the UK, ships directly to EU countries. They need a UK VAT registration and manage cross-border B2C sales through custom duties at the end customer's expense.

With a Deemed Supplier

When using platforms like Amazon, which act as deemed suppliers, different rules apply:

  • Example: Delta Limited, selling on Amazon UK to EU countries, must register for VAT in the UK. Amazon, as a deemed supplier, facilitates VAT reporting for EU sales, simplifying the seller's requirements.

Filing OSS Returns

Challenges and Requirements

Submitting OSS returns has been challenging due to the manual process required. EU countries, including Germany, face operational difficulties in implementing automated submission systems.

Data Preparation

Businesses must carefully prepare data to ensure accurate OSS reporting. Essential steps include:

  1. Service vs. Product Sales: Separate the sales of chargeable services and products.
  2. Domestic vs. Foreign Sales: Distinguish sales to German customers from those to other EU countries.
  3. Country-Specific VAT Rates: Declare transactions based on the applicable VAT rates for each EU country.

Summary and Conclusion

The OSS regulation represents a significant shift in how VAT is managed for e-commerce sellers within the EU. By consolidating VAT returns and simplifying registration processes, the OSS aims to reduce administrative burdens. However, both EU and non-EU sellers need to navigate exclusions, specific scenarios, and ensure proper data management for compliance.

While the initial transition may seem complex, utilizing OSS can streamline VAT operations in the long run, potentially saving significant time and effort. Businesses should consider consulting VAT experts to ease the transition and ensure compliance with new regulations.

Frequently Asked Questions (FAQ)

Do I need more than one registration after OSS? You need VAT registrations for your home country in the EU and any other EU countries where you store goods.

Will I need to report all my sales in the OSS report? No, only cross-border B2C sales are included in the OSS report.

Is there anything else I need to report besides the OSS return? Yes, domestic sales and B2B transactions must be reported through standard VAT returns in the respective countries.

How do I register for OSS? Registration is conducted through the BZSt online portal. For guidance, services like hellotax can assist with the registration process.

Who can file my OSS report? Authorized entities such as registered accountants or tax advisors can file the OSS report. Hellotax offers this service in various EU countries.

Can non-EU businesses use OSS reporting? Yes, non-EU businesses can choose a registration country within the EU, provided they have a VAT registration there.

Do I still need to file EC reports and PL SAF-T reports? Yes, B2B cross-border transactions must still be reported through standard mechanisms like the EC list.

Navigating VAT compliance under the OSS regulation presents challenges but also offers notable simplifications for cross-border e-commerce transactions. By understanding the nuances and leveraging expert guidance, businesses can efficiently adapt to the new system and focus on growth.